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TABLE OF CASES United Kingdom Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq 461 Adams v Cape Industries Plc [1990] Ch. 433 Aktieselskabet Dansk Skibsfinansiering v Brothers[2001] 2 BCLC 324 Aluminium Industries Vaasen BV v Romalpa Aluminium Limited [1976] 1 WLR 676 Ammonia Soda Co v Chamberlain [1918] 1 Ch 266 Bank Mellat v Mohammad Ebrahim Nikpour [1982] Com.L.R. 158 Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 Brady v Brady (1988) 3 BCC 535 Bray v Ford [1896] AC 44 British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006 Charterbridge Corporations v Lloyds Bank Ltd(1969) 2 All ER 1185 Continental Tyre and Rubber Co (G.B.) Ltd v Daimler Co [1915] 1 K.B. 893 Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 1 W.L.R 966 Cook v Deeks [1916] 1 AC 554 D.H.N. Food Distributions Ltd v Tower Hamlets L.B.C [1976] 1 W.L.R. 852 Dadourian Group v Simms [2006] EWHC 2973. Derry v Peak(1889) 14 App Cas 337 201 98, 109, 110 248, 249, 252 134 152 392 165, 172 136 200 364 94, 199 Dorchester Finance v Stebbings [1989] BCLC 4998 206 74 393 329 108 109 277 xviii
Facia Footwear Ltd (in administration) v Hinchliffe [1998] 1 BCLC 218 Ferguson v Carrington (1829) 9 Barn.& Cr. 59 Firestone Tyre & Rubber Co v Llewelyn [1957] 1 WLR 464 Foss v Harbottle (1843) 2 Hare 461 Fur Ltd v Tomkies(1936) 54 CLR 583 Green v Nixon (1857) 23 Beav 530 & 535, 53 ER 208 Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286 Hampson v Price’s Patent Candle Co(1876) 45 LJ Ch 437 Heron International Ltd v Lord Grade [1983] BCLC 244 HL Bolton (Engineering) Co Ltd v TJ Graham & Sons Ltd[1957] 1 QB 159 Hoggs v Cramphorn Ltd [1967] Ch 254 Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 Hutton v West Cork Rly (1883) 23 Ch D 654 Jones v Lipman & Anor [1962]1 WLR 832 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 Lloyd v Grace, Smith & Co [1912] AC 716 Load v Green (1846) 15 Mees & W 216 Lonrho Ltd v Shell Petroleum[1980] 1 WLR 627 Macaura v Northern Assurance Co Ltd [1925] AC 619 137 277 111 124, 194, 196, 203 220, 329 298 17, 77, 82, 192, 193, 359 139 124 75, 215, 227 136, 198 198, 208 139 114 75 214 277 83 77, 123 Mann & Another v Goldstein & Another [1968] 2 All ER 769 187 xix
Page 1 and 2: http://researchcommons.waikato.ac.n
Page 3 and 4: ABSTRACT This study examines the le
Page 5 and 6: TABLE OF CONTENTS ABSTRACT i ACNOWL
Page 7 and 8: CHAPTER 5 THEORY OF THE CORPORATION
Page 9 and 10: 7.3.3.3 Distribute its Capital to M
Page 11 and 12: 10.2.5.1 Meaning of Insolvency 10.2
Page 13 and 14: 10.6.2.2 Carrying on of any Busines
Page 15 and 16: CHAPTER 12 CONCLUSION AND RECOMMEND
Page 17 and 18: CLC Australian Company Law Cases CL
Page 19: Stanford LR Stanford Law Review Ste
Page 23 and 24: Re Avon Chambers Ltd [1978] 2 NZLR
Page 25 and 26: Re Produce Marketing Consortium Ltd
Page 27 and 28: Ultraframe (UK) v Fielding & Ors [2
Page 29 and 30: Mountford v Tasman Pacific Airlines
Page 31 and 32: Australia 3M Australia Pty Ltd v Ke
Page 33 and 34: Linton v Telnet Pty Ltd (1999) 30 A
Page 35 and 36: Malaysia Abdul Aziz bin Atan v Lada
Page 37 and 38: Perman Sdn Bhd & Ors v European Com
Page 39 and 40: Other Jurisdictions Singapore Rahj
Page 41 and 42: Companies Act 2006 Section 60(3)(c)
Page 43 and 44: Section 993 Section 993(2) Section
Page 45 and 46: Insolvency Act 1985 37, 70 Insolven
Page 47 and 48: Section 251 255 Part II Schedule 6
Page 49 and 50: Section 52(1) Section 52(2) Section
Page 51 and 52: Section 272(2) Section 272(2)(a) Se
Page 53 and 54: Section 385(4)(b) Section 385(4)(b)
Page 55 and 56: AUSTRALIA Absent Debtors Act (NSW)
Page 57 and 58: Section 206D(1)(b)(b)(ii) 374 secti
Page 59 and 60: Section 588FE(2)(a) Section 588FE(2
Page 61 and 62: section 588H (5) 241 Section 588H(6
Page 63 and 64: Section 598(3)(b) Section 598(3)(c)
Page 65 and 66: Bankruptcy Act 1967 MALAYSIA Sectio
Page 67 and 68: Section 130A(6) 391 Section 131 221
Page 69 and 70: Companies Regulation 1966 Regulatio
Page 71 and 72:
CHAPTER 1 THE STRUCTURE OF THE THES
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A discussion of directors’ duties
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The far-reaching implication of cor
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2.2.1 The United Kingdom The common
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2.2.3 Australia Australia has been
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CHAPTER 3 LITERATURE SURVEY - AN OV
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shareholders, had failed to mitigat
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was mainly responsible for the chal
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3.3 Interests in the Company-Shareh
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contributed by the shareholders and
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Statutes have attempted to address
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how the matter should be dealt with
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4.2 Development of Corporate and In
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colonies. 14 The emergence of compa
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originally incorporated in order to
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usiness fraud. 42 In 1825, the Bubb
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Companies Act also reveals providin
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Companies Ordinance 1953 of Sabah a
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In 1977, the Cork Committee was app
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the Committee foresaw difficulty du
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operation and termination of a comp
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enforceability of security interest
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procedure, and dispensed with the o
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The creditors‟ protection princip
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shareholders and on personal bankru
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directors as trustees. 162 Members
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4.3.3 Development of Insolvency Leg
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In Australia, the government respon
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appointment of an administrative re
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the current statutes were not effic
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insist on protection to directors i
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and judgment to run the company. 21
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due to the difficulty in obtaining
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The Australian Law Commission in 19
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instead, enacted section 135 253 in
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4.5 Conclusion Malaysia, New Zealan
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CHAPTER 5: THE THEORY OF THE CORPOR
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needs someone to run it on its beha
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The implication of the decision is
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English decisions as guidance and t
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Shareholders who have to incur high
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interests of shareholders by maximi
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situation, directors have a duty to
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concluded purchasing goods from thi
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stipulates directors “may conside
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subsidiary and may continue to pros
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A holding company may use a subsidi
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section 187 of the Australian Corpo
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its holding company), act in a mann
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is just and equitable, to make an o
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Syndicates (NZ) Limited (in liq) 13
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a) Extent to which the Related Comp
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That the management did not differe
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equirement of insolvency and it doe
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The House of Lords in Woolfson v St
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subsidiary. Abdul Malik J held that
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defendant company. During a meeting
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Uniphoenix Corporation Bhd v Raymon
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justice alone is not sufficient; th
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lenders, employees, suppliers and c
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company and as the residual claiman
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The claim that shareholders‟ righ
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particularly lack of effective mana
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management of the companies. Credit
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players‟ interests intertwine wit
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important for directors to build lo
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Despite having included favourable
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at the intersection of a number of
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Directors must weigh any particular
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Directors will also enlist the serv
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Contractarians regard employees in
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terms to their liking, they either
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to boycott the company. 134 The com
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On the other hand, the duty owed to
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and experiences in order to dischar
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CHAPTER 7: A CONCEPTUAL ANALYSIS OF
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Economists divided real capital whi
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the transformation of shares as rea
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the company‟s ability to pay its
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purchase or will not become insolve
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available where special resolution
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The idea that maintaining share cap
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must be satisfied by the company in
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7.4 Conclusion The doctrine of capi
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and once a resolution is passed, to
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The term 'insolvency' has also long
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equivalent to medical negligence ca
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meaning of inability to pay debts.
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It is important to distinguish as t
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long as the accounts give true and
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current assets must be taken stock
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cases the presumption of insolvency
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It is interesting to note in reachi
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CHAPTER 9 THE COMMON LAW DUTIES OF
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Voluntary creditors can be divided
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are not personally liable for any l
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confidence, a trustee who has been
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interests of various parties in the
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overriding duty is to the sharehold
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to look at the directors‟ purpose
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9.3.3 Duty not to Fetter Discretion
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The decisions of the Federal Court
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case, directors should disclose the
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misconception that the case law and
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other reference as to the developme
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Australia and Malaysia have express
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out “ ...the judgment is in the b
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the prospect of success as well as
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judge adopted the principle of iden
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individual trading through a compan
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liability can be imposed on them wh
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liquidators when it is insolvent. C
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CHAPTER 10 DIRECTORS’ DUTY TO PRE
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Malaysia did not make any changes o
Page 299 and 300:
interpretation of these provisions.
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sum of money that is owed or due.
Page 303 and 304:
Hence, action can be brought agains
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Directors in Australia can be held
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to the director to prove that he or
Page 309 and 310:
expect that the company was solvent
Page 311 and 312:
In the case of Secretary of State f
Page 313 and 314:
trading at a deficit. 64 In other w
Page 315 and 316:
maintained in section 213 of the In
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not „a party‟ if he knew that m
Page 319 and 320:
econcile the two judgments with one
Page 321 and 322:
carrying it on (whether because of
Page 323 and 324:
10.3.1.3 For any other Fraudulent P
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company. In this aspect, section 21
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to Australia and New Zealand which
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even though it was evident from the
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the steps taken were with the aim o
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decisions. 150 Therefore, directors
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The Law Commission proposed that th
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to reform the law, namely to reduce
Page 339 and 340:
A similar issue was raised in the E
Page 341 and 342:
The decision was later upheld by th
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10.4.3 Duty in relation Obligation
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fraudulent purpose.” 201 Although
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from the carrying on of the busines
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The first civil version of the inso
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amounts. 223 In Hussein v Good, 224
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of law of contract. The court must
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defendant. 244 Therefore, a directo
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additional capital, as well as a re
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trading without any other action ta
Page 361 and 362:
Another defect of the section is in
Page 363 and 364:
argue that there are reasonable gro
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10.6.2 Responsibility for Fraudulen
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Siow Yoon Keong v H Rosen Engineeri
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The courts have acknowledged that t
Page 371 and 372:
The defendant in the case relying o
Page 373 and 374:
To date, there have been few cases
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ability of the company to pay off i
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can be disqualified from taking par
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power to do so is an archaic equita
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is for a short period of time. This
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ights against the company are froze
Page 385 and 386:
involves a situation where the comp
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11.2.3 Winding-up Liquidation is a
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11.2.3.1 Effects of Successful Avoi
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transactions, 59 the provisions cle
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11.2.3.1.2 Recovery from Third Part
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ecover the proceeds of sale or to p
Page 397 and 398:
order. 83 If the value of the asset
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Without this class action, the unse
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the power to apply for a compensati
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defraud, which implies their culpab
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also be enforced by the company. 11
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The court has the power if it think
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contravention or pecuniary penalty
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discretion to order the director‘
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Marketing Consortium (No 2) 147 cle
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discovered that the director had en
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compensatory. 163 Damages are asses
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of causation similar to torts in as
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ecause the court considered that it
Page 423 and 424:
It should be noted that Re Cyona Di
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11.3.7.2.3 Duration The court also
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contribution order is made to the
Page 429 and 430:
This is similar to the case of frau
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company is using funds belonging to
Page 433 and 434:
Since section 304(1) originates fro
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11.3.8.2 Problems of Enforcement/Pr
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However, extracting promise of inde
Page 439 and 440:
In relation to an action against a
Page 441 and 442:
Investments Commission is entitled
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The position in Australia has clear
Page 445 and 446:
Disqualification on the grounds of
Page 447 and 448:
As a result of the recommendations
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exercised by the Registrar or the O
Page 451 and 452:
actions which are committed with a
Page 453 and 454:
The court has to deduce evidence of
Page 455 and 456:
11.4.2.1 Standard of Proof Disquali
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11.4.2.2 Court’s Order Section 6
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of disqualification. 322 However, t
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mitigating factors considered by th
Page 463 and 464:
11.5 Other Remedies 11.5.1 Mareva I
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for under the Act. 348 The action p
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of trust or breach of duty in relat
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CHAPTER 12 CONCLUSION AND RECOMMEND
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The separate legal personality conc
Page 473 and 474:
deemed to be an alien concept to Br
Page 475 and 476:
positive action to minimize losses
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insolvent. In Malaysia, there is no
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BIBLIOGRAPHY BOOKS and ARTICLES AHM
Page 481 and 482:
BENNETT, Howard, 'Late Floating Cha
Page 483 and 484:
COBURN, Niall F, 'Insolvent Trading
Page 485 and 486:
http://ssrn.com/abstract=988944 at
Page 487 and 488:
FISHER, Gregory, LEE , Janet and JO
Page 489 and 490:
GUNASEKARA, Gehan and TOY, Alan, 'L
Page 491 and 492:
HOPT, Klaus J., 'Comparative Compan
Page 493 and 494:
KEAY, Andrew and Murray, Michael, '
Page 495 and 496:
McCHESNEY, Fred S., 'Economics, Law
Page 497 and 498:
OTTOLENGHI, S, 'From Peeping Behind
Page 499 and 500:
ROSS, Mike, Corporate Reconstructio
Page 501 and 502:
SCHWARTZ, Alan, ‗A Normative Theo
Page 503 and 504:
WALTERS, Adrian, 'Void Dispositions
Page 505 and 506:
WORTHINGTON, Sarah, 'Subrogation Cl
Page 507 and 508:
REPLIES TO EXAMINERS APPENDIX 1 Pag
Page 509 and 510:
Page 220-it is asserted that direct
Page 511 and 512:
What are the criteria for determini
Page 513 and 514:
addition it provides incentive for
Page 515 and 516:
See also Secretary of State for Tra
Page 517 and 518:
Most jurisdictions in Australia hav
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